The Burlington Ins. Co. v. Panacorp Inc.
| Citation | 758 F.Supp.2d 1121 |
| Decision Date | 23 December 2010 |
| Docket Number | Civ. Nos. 09–00587 ACK–BMK, 10–00382 ACK–BMK. |
| Parties | The BURLINGTON INSURANCE COMPANY, Plaintiff,v.PANACORP, INC.; Macario C. Panajon; David Kahookele; Kimberly Anne Norva, Individually and as Personal Representative of the Estate of Sean Miguel Norva, Deceased, and as Next Friend of Khelan Norva, a Minor; Maria Marquez; and Joel Rehmer, Defendants.The Burlington Insurance Company, Plaintiff,v.PSC Industrial Outsourcing, L.P., Defendant. |
| Court | U.S. District Court — District of Hawaii |
OPINION TEXT STARTS HERE
William C. Morison, Morison Holden Derewetzky & Prough, LLP, Walnut Creek, CA, for Plaintiff.Katharine M. Nohr, Law Offices of Katharine M. Nohr, Kaneohe, HI, for Panacorp, Inc. and Macario C. Panajon.Dennis W. Potts, Honolulu, HI, for David Kahookele.Anthony Y.K. Kim, Diane T. Ono, Gary O. Galiher, Ilana Kananipiliokala Waxman, Jeffrey T. Ono, L. Richard Derobertis, Scott K. Saiki, Galiher Derobertis Ono, Honolulu, HI, for Kimberly Anne Norva, Individually and as Personal Representative of the Estate of Sean Miguel Norva, Deceased, and as Next Friend of Khelan Norva, a Minor and Maria Marquez.C. Michael Heihre, Christopher T. Goodin, Kelly G. LaPorte, Cades Schutte, Honolulu, HI, for Joel Rehmer and PSC Industrial Outsourcing, L.P.
ORDER (1) GRANTING DEFENDANT REHMER'S STAY MOTION (2) GRANTING DEFENDANT PSC'S STAY MOTION AND (3) DENYING DEFENDANT NORVA'S MOTION TO DISMISS
This consolidated declaratory judgment action stems from an industrial explosion (“Explosion”) at a used oil recycling plant (“Plant”) in Kapolei, Hawai'i, operated by PSC Industrial Outsourcing, L.P. (“PSC”). On May 30, 2008, PSC entered into a contract agreement (“5/30/2008 Contract”) with a contractor, identified as “Pan Co,” to perform work at the Plant. Macario C. Panajon (“Panajon”), as President, signed the 5/30/2008 Contract on behalf of the contractor. Under this contract, Pan Co promised it carried insurance and that it would include PSC as an additional insured. It also agreed to defend, indemnify, and hold harmless PSC and its agents and employees from and against any and all claims and damages arising out of the contract work.
On October 7, 2008, Pan Co workers,2 including Sean Miguel Norva (“Sean Norva”), performed work at the Plant. Joel Rehmer (“Rehmer”), a PSC operations manager, was also working at the Plant that day. While Sean Norva was welding on a catwalk, a used oil tank below suddenly exploded. The Explosion killed Sean Norva, injured David Kahookele (“Defendant Kahookele” or “Kahookele”), and caused damage to the Plant and to Bomat, Ltd. d.b.a. Bonded Materials Company (“Bomat”), a concrete production facility nearby.
On October 31, 2008, PSC notified “PanCo,” attention “Mr. Mario Panajon,” of claims arising from the Explosion, asked for indemnification, and requested that appropriate insurers be notified. At the time of the Explosion, “Macario C. Panajon dba: Panco” was listed as a Named Insured under a commercial general liability policy (“Policy”) issued by The Burlington Insurance Company (“Burlington”). Burlington received PSC's October 31, 2008 letter, as well as a subsequent notice that claims had been asserted against Rehmer. On December 10, 2009, Burlington informed PSC that it had no duty to defend or indemnify PSC under the Policy because the 5/30/2008 Contract
As described in greater detail below, PSC and Panacorp, Inc. (“Panacorp”) have been sued in three separate state court actions (Rehmer has been sued in one state court action). In each action, PSC has filed a third party-complaint seeking a declaration that it is covered under the Policy. Burlington has filed two actions in this Court. One seeks (1) a declaration that Burlington has no duty to defend or indemnify Panacorp or Norva and (2) reimbursement for the cost of defending Panacorp; another seeks a declaration that Burlington has no duty to defend or indemnify PSC. These federal actions are now consolidated.
On September 24, 2009, Kimberly Anne Norva, individually and as Personal Representative of the Estate of Sean Miguel Norva (deceased) and as Next Friend of Khelan Norva (a minor), and Maria Marquez (collectively, “Norva”) filed a personal injury action in the Circuit Court of the First Circuit in Hawai'i against PSC and Rehmer. Kimberly Norva, et al. v. PSC Industrial Outsourcing, LP, et al., Civ. No. 09–1–2157–09 PWB (“ Norva ”).
On October 29, 2009, PSC and Rehmer filed separate answers, counterclaims, and third-party complaints. PSC filed a counterclaim against Norva and a third-party complaint against Panacorp and Burlington. PSC's third-party complaint sought, among other things, a declaration that PSC is covered under the Policy. Rehmer's third-party complaint was asserted only against Panacorp, and did not seek declaratory relief.
On November 19, 2010, Norva filed a cross-claim against Panacorp.
On March 19, 2010, PSC and Rehmer moved to amend their respective third-party complaints into a consolidated third-party complaint asserting alter-ego claims against Panajon, the sole owner of Panacorp. The unopposed motion was withdrawn, however, after PSC learned that Panajon and his wife had voluntarily filed for Chapter 13 bankruptcy on April 1, 2010.
On November 29, 2010, the court dismissed PSC's third-party complaint against Burlington without prejudice to PSC's asserting such claims against Burlington in a separate lawsuit.3
On November 9, 2009, Kahookele filed a personal injury action in the Circuit Court of the First Circuit in Hawai'i against Panacorp and PSC. David Kahookele v. Panacorp, Inc., et al., Civ. No. 09–1–2616–11 RAN (“ Kahookele ”).
On April 1, 2010, PSC filed a third-party complaint against Norva, Panajon, and Burlington. As in Norva, PSC's third-party complaint in Kahookele sought a declaration that PSC is covered under the Policy.
On November 10, 2010, the court granted Burlington's motion to sever PSC's third-party complaint against Burlington from the remaining claims in Kahookele.4
On September 30, 2010, Bomat and Great American Insurance Company filed a negligence, strict liability, and nuisance action in the Circuit Court of the First Circuit in Hawai'i against PSC d.b.a. Phillips Services Hawaii, PSC Industrial Services, and Panacorp. Bomat, Ltd. v. PSC Industrial Outsourcing, LP, et al., Civ. No. 10–1–2090–09 RAT (“ Bomat ”).
On October 20, 2010, PSC filed a third-party complaint against Norva, Panajon, and Burlington. As in Norva and Kahookele, PSC's third-party complaint in Bomat sought a declaration that PSC is covered under the Policy.
On December 1, 2010, Burlington filed a motion to dismiss or to sever the third-party complaint. That motion is scheduled to be heard by the state court on January 18, 2011.
On December 11, 2009, Burlington filed a complaint (“12/11/09 Complaint”) in this Court against Norva, Panacorp, Panajon, Kahookele, and Rehmer, which sought (1) a declaration that Burlington has no duty to defend or indemnify Panacorp or Norva and (2) reimbursement from Panacorp. Doc. No. 1 (Civ. No. 09–00587).5 On January 4, 2010, Panacorp and Panajon filed an answer; on March 9, 2010, Norva filed an answer; on March 16, 2010, Kahookele filed an answer; and on March 19, 2010, Rehmer filed an answer. Doc. Nos. 8, 20, 24, 31.
On July 7, 2010, Burlington filed a complaint in this Court (“12/7/10 Complaint”) against PSC, which sought a declaration that Burlington has no duty to defend or indemnify PSC. Doc. No. 1 (Civ. No. 10–00382). PSC filed an answer on August 4, 2010. Doc. No. 12 (Civ. No. 10–00382).
On July 30, 2010, Rehmer moved to stay the action against him (“Rehmer Stay Motion”) based on Panajon's Chapter 13 bankruptcy petition, the Younger abstention doctrine, and/or the Federal Declaratory Judgment Act. Doc. No. 38. 6 Norva filed a memorandum in opposition to the Rehmer Stay Motion (“Norva Opp'n to Rehmer Stay Motion”) on August 13, 2010. Doc. No. 56. On the same day, Burlington filed a memorandum in opposition to the Rehmer Stay Motion (“Burlington Opp'n to Rehmer Stay Motion”) and Panacorp and Panajon moved to join the Rehmer Stay Motion. Doc. Nos. 57–58. On August 24, 2010, Rehmer filed a reply to Norva's opposition to the Rehmer Stay Motion and a reply to Burlington's opposition to the Rehmer Stay Motion (“Rehmer Stay Reply”). Doc. Nos. 62–63.
On August 4, 2010, PSC likewise moved to stay the action against it (“PSC Stay Motion”) based on Panajon's Chapter 13 bankruptcy petition, the Younger abstention doctrine, and/or the Federal Declaratory Judgment Act. Doc. No. 13 (Civ. No. 10–00382). On August 19, 2010, Burlington filed a memorandum in opposition to PSC's Stay Motion (“Burlington Opp'n to PSC Stay Motion”). Doc. No. 16 (Civ. No. 10–00382). On August 26, 2010, PSC filed a reply memorandum in support of its stay motion (“PSC Stay Reply”). Doc. No. 20 (Civ. No. 10–00382).
On August 2, 2010, Norva moved to dismiss the 12/11/09 Complaint (“Motion to Dismiss”), and on August 25, 2010, Kahookele moved to join this motion. Doc. Nos. 48, 65.7
On August 31, 2010, Magistrate Judge Barry M. Kurren held a hearing on the Rehmer Stay Motion and the PSC Stay Motion. Magistrate Judge Kurren (1) denied these stay motions to the extent they were premised on Panajon's bankruptcy and (2) reserved the motions for this Court to rule on to the extent they were based on the Younger abstention doctrine and the Declaratory Judgment Act....
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